The past few months have been a rough time for investors, to say the least. Share prices in most sectors and around the world are down substantially as investors flee from the uncertainty in American and European financial markets.
Gold and silver prices are up substantially, but the companies in those sectors on average have suffered significant losses in share value.
While investors are understandably nervous with regard to the economic outlook, the mining companies are generating huge profits by selling metal at high prices. That cash is being put back to work as those companies endeavour to replace reserves and grow their businesses.
The offer a few weeks ago from Cameco to buy uranium explorer Hathor was priced at a 40% premium to the market price. Investors reacted by pushing the Hathor share price well above the offer price. That offer and the subsequent market action serve to vividly demonstrate how undervalued some of these companies are.
The offer for Hathor and the likelihood of a number of other offers in the nearterm will serve to further remind investors of the real value of those exploration and development companies which gold high quality metal deposits. Now, more than ever, the junior exploration companies provide investors with inexpensive exposure to the metal markets. Companies that are successful in adding value to their projects will continue to receive recognition from investors and will increase in value as the companies advance.